/NOT FOR DISTRIBUTION IN THE UNITED
STATES OR OVER UNITED
STATES WIRE SERVICES/
Transaction Highlights
- Acquisition of a portfolio of 15 landmark properties in Québec
and Ontario from Ivanhoé
Cambridge, a real estate
subsidiary of the Caisse de dépôt et placement du Québec
- Acquired portfolio consists of 10 enclosed shopping centres,
one retail complex, three office properties and one industrial
property, totalling approximately 5.7 million square feet of gross
leasable area
- Purchase price of $1.527 billion,
representing a capitalization rate of approximately 6.5%
- Natural and complementary fit with Cominar's existing portfolio
and management expertise
- Cominar becomes the leading provider of retail space in
Québec
- Enhances diversification by asset class with pro forma retail
NOI contribution increasing to 38%
- Strong support from Ivanhoé Cambridge, evidenced by a $250 million equity private placement in Cominar
at a price of $19.00 per trust
unit
- Ivanhoé Cambridge will
become the largest unitholder of Cominar at 8.5%, followed by the
Dallaire family
- Concurrent offering of $250
million of Cominar trust units on a bought deal basis, at a
price of $19.00 per trust unit
- Provides immediate accretion to AFFO per unit on a leverage
neutral basis
- Further increases Cominar's entry in the GTA with the
acquisition of a downtown class A office property and suburban
retail property
Acquisition of 15 Properties from Ivanhoé Cambridge
QUÉBEC CITY, Aug. 26,
2014 /CNW Telbec/ - Cominar Real Estate Investment Trust
("Cominar" or "the REIT") is pleased to announce that it has
entered into a definitive agreement with Ivanhoé Cambridge Inc.
("Ivanhoé Cambridge"), the real
estate subsidiary of Caisse de dépôt et placement du Québec ("La
Caisse"), for the acquisition by Cominar of a real estate portfolio
of 15 properties in Québec and Ontario for a purchase price of $1.527 billion (the "Acquisition"). The acquired
portfolio, comprising a total of approximately 5.7 million square
feet of gross leasable area, consists of 11 retail properties (4.9
million square feet), three office properties (0.7 million square
feet) including one property under development, and one industrial
and mixed-use property (0.1 million square feet), with an occupancy
rate of 96.7%.
The Acquisition will increase Cominar's asset
base by approximately 25% to more than $8.1
billion with more than 45 million square feet of leasable
area. The Acquisition will also enhance the REIT's asset type
diversification profile, increasing its retail net operating income
("NOI") contribution from 24% to 38%, with office at 44% and
industrial and mixed-use at 18%. The Acquisition will have a
marginal impact on geographic distribution.
The Acquisition price, which is subject to
certain adjustments, implies a capitalization rate of approximately
6.5%. The Acquisition is expected to be immediately accretive on a
leverage neutral basis to Cominar's adjusted funds from operations
per unit.
The approximately 120 Ivanhoé Cambridge employees dedicated to the
properties involved in the Acquisition will transfer to
Cominar.
Mr. Michel
Dallaire, Cominar's President and Chief Executive Officer,
commented: "This acquisition represents an opportunity for Cominar
to acquire a unique portfolio of landmark retail properties from
Ivanhoé Cambridge, which is a
natural and highly complementary fit with our own retail platform,
and marks another important milestone in our development and
further enhancing our growth strategy. This acquisition will also
allow us to strengthen our competitive position as Québec's leading
provider of retail space while enhancing the diversification of our
asset base with pro forma NOI contribution from our retail
properties increasing from 24% to 38%. This acquisition will also
be immediately accretive to AFFO per unit on a leverage neutral
basis, at a time where we have already reduced our distributable
income payout ratio below our 90% target" added
Mr. Dallaire.
"We are most pleased to welcome Ivanhoé
Cambridge as a major unitholder,
and to be able to work in close co-operation with them. Ivanhoé
Cambridge is a world-class real
estate company and we can only benefit from their leading expertise
in the retail sector" added Mr. Dallaire.
The Acquisition is expected to close on or about
October 1, 2014, following
satisfaction of all customary closing conditions, or such later
date as Cominar and Ivanhoé Cambridge may agree, but in any event no later
than November 26, 2014.
Details of the Portfolio
|
Property |
Location |
GLA(1) |
Retail |
Mail Champlain(2) |
Brossard, QC |
718 |
Centropolis |
Laval, QC |
674 |
Rockland(3) |
Town of Mount-Royal, QC |
649 |
Galeries Rive-Nord |
Repentigny, QC |
569 |
Les Rivières |
Trois-Rivières, QC |
422 |
Dixie Outlet Mall |
Mississauga, ON |
419 |
Carrefour Rimouski |
Rimouski, QC |
345 |
Centre Commercial
Rivière-du-Loup |
Rivière-du-Loup, QC |
312 |
Carrefour St-Georges |
St-Georges,
QC |
311 |
Les Galeries de Hull(4) |
Gatineau, QC |
306 |
Carrefour Frontenac |
Thetford Mines, QC |
180 |
Total Retail |
|
|
4,905 |
|
|
|
|
Office |
Édifice de la Haute-Ville |
Québec City, QC |
284 |
55 University Ave. |
Toronto, ON |
258 |
3055 Boul. St-Martin
Ouest(5) |
Laval, QC |
118 |
Total Office |
|
|
660 |
|
|
|
|
Industrial |
Le 505 Parc
Technologique |
Québec City,
QC |
99 |
|
|
|
Total Portfolio |
|
|
5,664 |
_____
Notes
(1) In thousands of square feet.
(2)The sale of this property, which is 50% owned by Ivanhoé
Cambridge and 50% by a third
party, is subject to approval by the co-owner. The third
party has advised Ivanhoé Cambridge of its interest in selling.
(3) This property, in respect of which Cominar has made Ivanhoé
Cambridge a distinct offer, is
subject to a right of first refusal in favour of a third
party.
(4) The sale of this property, which is 85% owned by Ivanhoé
Cambridge and 15% by a third
party, is subject to a right of first refusal and a buy-sell
provision.
(5) Under development.
Two of the properties involved in the
Acquisition are co-owned by third parties. The REIT will make
offers to acquire such third-party interests, which, if accepted,
would increase the purchase price of the Acquisition to
$1.63 billion.
Offering of Trust Units
Cominar also announced today that it has entered into an agreement
with a syndicate of underwriters co-led by National Bank Financial
Inc. and BMO Capital Markets to sell, on a bought deal basis,
13,158,000 Cominar trust units (the "Offering"). The agreement with
the syndicate provides for the issuance of the trust units at a
price of $19.00 per trust unit for
gross proceeds of approximately $250
million. The net proceeds of the Offering will be used to
fund, in part, the Acquisition.
Cominar has also granted the underwriters an
over-allotment option to purchase 1,973,700 additional trust units,
representing 15% of the size of the Offering. The over-allotment
option may be exercised until 30 days following the closing of the
Offering.
The trust units will be offered in all provinces
and territories of Canada pursuant
to a short-form prospectus. The issuance of the trust units
pursuant to the Offering is subject to customary approvals of
applicable securities regulatory authorities, including the
Toronto Stock Exchange. Closing of
the Offering is expected to take place on or about September 16, 2014.
Private Placement of Trust Units
Concurrently with the Offering, Cominar has entered into a
subscription agreement under which the REIT will complete a private
placement with Ivanhoé Cambridge,
pursuant to which Ivanhoé Cambridge will purchase, at the time of
closing of the Acquisition, 13,158,000 trust units at $19.00 per trust unit for gross proceeds to the
REIT of $250 million (the "Private
Placement"). The issuance of the trust units to Ivanhoé
Cambridge is subject to customary
approvals of applicable securities regulatory authorities,
including the Toronto Stock Exchange. Closing of the Private
Placement will take place upon closing of the Acquisition.
Assuming completion of the Private Placement and
the Offering, but not the exercise of the over-allotment option,
Ivanhoé Cambridge will
beneficially own, or exercise control or direction over, directly
or indirectly, an aggregate of 13,158,000 trust units of Cominar,
representing approximately 8.5% of the issued and outstanding trust
units. Ivanhoé Cambridge has also
agreed not to sell any trust units of Cominar it will hold for a
period of nine months from the closing of the Acquisition, at which
time 50% of such trust units will cease to be subject to these
restrictions, with the remaining trust units also ceasing to be
subject to these restrictions twelve months from the closing of the
Acquisition. Ivanhoé Cambridge
will also be invited to put forward a candidate for election on the
Board of Trustees of Cominar, subject to the approval of the
Nominating and Governance Committee of Cominar. This will enable
Ivanhoé Cambridge to contribute
more readily to Cominar's future growth. Closing of the Private
Placement is expected to take place on or about October 1, 2014, concurrent with the closing of
the Acquisition.
Unsecured Bridge Facilities and Mortgage
Financing
The balance of the purchase price of the Acquisition, together with
the transaction expenses, will be funded through new unsecured
bridge facilities co-underwritten by National Bank of Canada and Bank of Montreal of up to $950
million (comprised of a $850
million unsecured bridge facility and a $100 million 3-year unsecured credit facility)
and a new 10-year mortgage of $250
million to be provided by Otéra Capital, the commercial real
estate financing subsidiary of La Caisse.
The financing plan is structured to provide
significant financial flexibility, providing Cominar with
approximately $150 million of
available liquidity upon closing of the Acquisition. Cominar
intends to replace the bridge facility, over time, with new
mortgages and senior unsecured debentures.
Pro Forma Leverage
Following closing of the Acquisition, of the Offering and the
Private Placement, Cominar expects to have a debt to gross book
value ratio of approximately 57.5% (approximately 55.3% excluding
convertible debentures). Cominar's long-term target leverage
remains at approximately 50%.
Cominar's aggregate unencumbered assets will
increase to more than $3.5 billion
representing approximately 148% of the aggregate principal amount
of senior unsecured indebtedness outstanding following the closing
of the Acquisition, the Offering and the Private Placement.
National Bank Financial and BMO Capital Markets
are acting as financial advisors to Cominar. RBC Capital Markets
Real Estate Group is acting as real estate advisor to Cominar in
respect of the Acquisition. Davies Ward
Phillips & Vineberg LLP is acting as legal counsel to
Cominar. Norton Rose Fulbright LLP is acting as legal counsel to
Ivanhoé Cambridge.
COMINAR PROFILE as at August 26, 2014
Cominar is the third largest diversified real estate investment
trust in Canada and remains the
largest commercial property owner in the Province of Québec.
Cominar currently owns a real estate portfolio of 526 properties in
three different market segments, that is, office properties, retail
properties and industrial and mixed-use properties. Cominar's
portfolio totals 39.5 million square feet spread out across Québec,
Ontario, the Atlantic Provinces
and Western Canada. Cominar's
objectives are to pay growing cash distributions to unitholders and
to maximize unitholder value through proactive management and the
expansion of its portfolio.
Cominar offers unitholders the opportunity to
participate in its Unitholder Distribution Reinvestment Plan, which
allows them to receive their monthly cash distributions as
additional Cominar units. Participants will be entitled to receive
an additional distribution equal to 5% of the distributions
reinvested, which will be reinvested in additional units. For more
information and to obtain a participation form, please visit
Cominar's website at www.cominar.com.
Forward-Looking Statements
This press release may contain forward-looking
statements with respect to Cominar and its operations, strategy,
financial performance and financial condition. These statements
generally can be identified by the use of forward-looking words
such as "may", "will", "expect", "estimate", "anticipate",
"intend", "believe" or "continue" or the negative thereof or
similar variations. The actual results and performance of Cominar
discussed herein could differ materially from those expressed or
implied by such statements. Such statements are qualified in their
entirety by the inherent risks and uncertainties surrounding
future expectations. Some important factors that could cause actual
results to differ materially from expectations include, among other
things, general economic and market factors, competition, changes
in government regulation and the factors described under "Risk
Factors" in the Annual Information Form of Cominar. The
cautionary statements qualify all forward-looking statements
attributable to Cominar and persons acting on its behalf. Unless
otherwise stated, all forward-looking statements speak only as of
the date of this press release.
SOURCE COMINAR REAL ESTATE INVESTMENT TRUST